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Don Dion
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Don Dion (donalddion@gmail.com, @DRDInvestments) is the owner and Chief Investment Officer of DRD Investments, LLC, based in Naples, FL. and Williamstown, MA., a family office focused on managing a long/short hedge fund, real estate assets and various other financial assets for the Dion family.... More
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  • In A Quiet Week For IPOs, Sutherland Asset Management Is A No Go

    Sutherland Asset Management (BATS:SLD) expects to raise $148.3 million in its upcoming IPO. Based in New York City, Sutherland Asset Management is a REIT managed by Waterfall Asset Management that is focused primarily on small commercial loans and mortgage backed securities.

    Sutherland Asset Management will offer 8,064,500 shares at an expected price range of $15 to $16. If the underwriters price the IPO at the mid-point of that range, SLD will have a market capitalization of ~$550 million.

    SLD filed for the IPO on October 2, 2014.

    Lead Underwriters: FBR Capital Markets, J.P. Morgan Securities, and Morgan Stanley

    Underwriters: Citigroup Global Markets, JMP Securities, Keefe Bruyette & Woods, and Ladenburg Thalmann & Co.

    Business Summary: Real Estate Finance Company Focused on Mortgage Backed Securities and Small Commercial Loans

    Sutherland Asset Management is an REIT that originates, purchases, services, and manages primarily SBC loans. Waterfall Asset Management, LLC manages and advises Sutherland. Generally, the REIT works with commercial loans that have an original principal balance of $500,000 to $10 million, made to small businesses to acquire real estate. In addition, they acquire mortgage backed securities for a variety of real estate purposes, including multi-family residential, retail and office space, and warehouse properties. Through September 30, 2014, Sutherland had a portfolio of assets with an aggregate unpaid balance of approximately $1.5 billion and a carrying value of approximately $1.2 billion.

    Sutherland's wholly-owned subsidiary, ReadyCap Holdings, has originated over $411 million in conventional loans across 18 states in the last two years. Additionally, its wholly-owned brokerage and advisory subsidiary, Coldwell Banker Commercial Alliance (OTCPK:CBCA), provides sales, leasing, transaction management, and facilities management services to small commercial property owners. The company expects CBCA to develop into a source of loan originations in the future.

    For further business information, see SLD's SEC filings.

    SLD's loan portfolio is summarized below.

    (click to enlarge)

    (Source)

    Executive Management With Extensive Experience in Structured Debt

    CEO Tom Capasse is a principal and co-founder of Waterfall Asset Management. He has over 30 years of experience in the structured debt industry, and along with Jack Ross, he co-founded the ABS group in the 1980s, which worked closely with the Resolution Trust Corporation. He has also held positions at Greenwich Capital, Nomura Securities, and Macquarie Securities. Prior to that, he was a fixed income analyst at Dean Witter and Bank of Boston. He holds a B.A. from Bowdoin College in Brunswick, Maine.

    Jack Ross is a principal and co-founder of Waterfall Asset Management. He has 30 years of experience in the structured debt sector. His previous positions include stints at Drexel Burnham Lambert, Merrill Lynch, and Laventhol & Horvath. He founded Licent Capital, a specialty broker/dealer for the securitization of intellectual property. Mr. Ross holds an MBA from The Wharton School at the University of Pennsylvania.

    Potential Competition: Banks, Specialty Finance Companies, Savings and Loans, and Others

    The asset backed securities market is highly diversified with four sectors (home equity loans, student loans, auto loans, and credit cards) making up the largest portion of the market. Still, the segment in which Sutherland Asset Management invests is considerably large and diverse as well, making it a prime target for regional and national banks, community banks, savings and loans, and other REITs that invest in small commercial and multi-family residential loans and properties.

    Valuation: Bottom and Top Line Growth

    Sutherland Asset Management provided the following figures from its financial documents for the nine months ending September 30:

    Total interest income: $48,575,000 (up from $11,089,000 for the same period in 2013)

    Net Income: $18,899,000 (up from $2,668,000 in 2013)

    Total Assets: $1,335,669,000

    Total Liabilities: $853,530,000

    Stockholders' Equity: $432,139,000

    Conclusion: Better IPOs Next Week

    We are encouraged by SLD's growth across its income statement, as well as solid balance sheet.

    While the asset backed securities market is diversified, it is also highly competitive.

    We suggest investors consider passing on this IPO.

    We invite readers wishing to join the discussion on IPOs to click the +FOLLOW button above the title of this article and those looking for the latest updates to click +Get real time alerts.

    Jan 13 4:44 PM | Link | Comment!
  • IPO Lockup Expiration - TubeMobul (TUBE) - Wed., 1.14
    • January 14, 2015, concludes the 180-day lockup period for TUBE; at this point, TUBE's major pre-IPO shareholders will be able to sell ~22 million previously restricted shares.
    • With TUBE's IPO consisting of just ~6.3 million shares, the event could cause a supply shock and significantly decrease the price of TUBE stock.
    • TUBE has posted very strong results, and its price has nearly tripled since its IPO; insiders could be itching for profits.
    • We see the possibility for strong negative returns and a short opportunity at TUBE's lockup expiration.
    • See our full article for further analysis.
    Tags: TUBE
    Jan 12 9:37 AM | Link | Comment!
  • IPO Lockup Expiration - Globant S.A. - Wed., 1.14
    • January 14, 2015 concludes the 180-day lockup period on creative IT company Globant S.A.
    • When the lockup period ends, Globant's pre-IPO shareholders will have the chance to sell their ~26 million shares (previously restricted); this may cause a significant decrease in Globant's share price.
    • Recent research shows greatest negative returns (-5.8%) in the period of days (-11, 9) surrounding the event day (0).
    • We suggest investors consider a short opportunity in the days surrounding the event.
    • Full analysis here.
    Tags: GLOB
    Jan 12 9:35 AM | Link | Comment!
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